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Wednesday, 31 August 1994
Page: 725

Senator SHORT (6.30 p.m.) —The opposition is now in a position to proceed with this bill. The States Grants (General Purposes) Bill 1994 seeks to authorise general purpose funding grants to the states and territories in accordance with the agreement reached at the Premiers Conference in March 1994. For the year at hand, 1994-95, the amount will be about $15 billion, which represents a 4.5 per cent increase over the funding level for 1993-94.

  The bill is basically a standard bill which is introduced annually to provide the states and territories with general purpose funding from the Commonwealth. As such, it should be uncontroversial, although it is in fact a matter of considerable contention from year to year in terms of the amount, and on some occasions for other purposes as well. This year is no exception because again we have seen in this bill the Labor government's attempts to force conditions on grants which, of course, is completely incongruous and which is incompatible with the whole concept of general purpose funding, which is untied funding.

  The worst example of that in this year's bill is Labor's efforts to enforce compulsory student unionism on campuses. This bill contains what I would describe as quite a perverse clause—and I use that word in the sense of it being an objectionable clause. It is also quite out of character with the general purpose funding nature of the bill and the whole purpose of this type of funding. At the committee stage we will seek to remove this perverse clause—clause 15. I am having circulated in the chamber a copy of the amendment which simply seeks to delete clause 15. But we will take that up at the committee stage.

  A number of states have introduced or proposed laws to introduce varying degrees of voluntary student unionism. Of course, as a fundamental matter of individual human rights, all unionism should be voluntary, and totally voluntary at that.

Senator Zakharov —You have to pay for your services.

Senator SHORT —Voluntarism cannot be partial, Senator Zakharov. It cannot be conditional. Either it is voluntary or it is not voluntary. At the moment, campuses enforce compulsory student unionism linked to enrolment. Failure to pay the prescribed union fee, which is up to $350 per annum now, results in the withholding of a student's results and a failure to pass. In other words, no ticket, no degree. That, I think, to most fair-minded Australians, would be regarded as a totally objectionable fact and certainly an objectionable principle.

  The coalition, with its commitment to true individual liberty and liberalism, finds this situation abhorrent. At a time when students are often under financial pressure and the taxpayer is providing assistance to many through Austudy, it is ridiculous that a compulsory fee of $200 or $300 per student is compelled from all students—and `compelled' is the operative word there.

  It is also incredible that an institution which exists to further intellectual and educational development can be party to such a breach of freedom of association and thought. Student compulsory fees are often imposed to prop up inefficient services which can easily be provided profitably by private contractors, which is what happens on the more efficiently run campuses like the University of Queensland and the Australian National University.

  The fees are frequently also used to fund unrepresentative political activities. These usually leftist activities frequently include fat salaries and free travel for the office bearers. They involve high overhead costs, often quite extremist type publications, grants to unsupported clubs and, unfortunately, more often than not, a contribution to the National Union of Students which is simply a Labor Party front and which campaigns alongside the Labor Party during election campaigns. Those functions are a waste of students' money and an improper use of funds compulsorily levied. They are activities in regard to which students should be able to decide freely whether they wish to participate or not. No one is suggesting they should not do it but there should be freedom of choice to do it and it should not be funded by compulsory levies on students who may well choose not to so participate.

  Students, by definition, are supposed to be intelligent, and they are. They can and should be able to make their own decisions and choices about how much and where their often scarce money goes. Honourable senators who really believe in either states rights and/or more particularly human rights and the rights of the individual, the rights of people, will vote with the opposition to remove this repugnant provision from the bill when we deal with it in the committee stage.

  This general issue and clause 15 are representative of a greater problem in our nation's federal-state relations. That problem is the increasing tendency of the Commonwealth government under Labor control to direct, compel or override elected representative state governments acting on behalf of and in the interests of their electors. Federation unified our states into one nation. That process was formalised, of course, under the constitution. The constitution is a document of the Australian people, not the Commonwealth executive, as Labor would like. It is a document which sets out the responsibilities and the divisions of power between the various tiers of our system of government.

  Effective, productive Commonwealth-state relations have not been an area of success for either the Hawke or Keating Labor governments. Indeed, I would say without any fear of contradiction that they have been areas of quite abject failure and that has been at great cost to the nation as a whole.

  With regard to the present Prime Minister (Mr Keating), we know only too well that he is a power hungry, egotistical, egocentric centralist. He believes, in whatever area of public policy there might be, that he and the central government should have absolutely unfettered power to impose their views on every other Australian. Mr Keating, of course, has a long history of antagonism towards the states and territories. When he was Treasurer he used the states and territories as the means to reduce his budget deficit by slashing their grants whilst at the same time increasing his own expenditure.

  From 1984 to 1992, in every one of those eight years, the government of which Mr Keating was Treasurer throughout that period, perhaps with one exception, cut financial assistance grants to the states in real terms. Yet in only three of those eight years, those three years being 1986 to 1989, did he reduce Commonwealth own purpose outlays.

  Even in those years when he did reduce the Commonwealth's outlays he cut the states' money by more than his own. The proportion of Commonwealth budget funds going to state governments has fallen from 25.8 per cent in 1984 to 21.4 per cent this year. As outlays are currently $120 billion, it means a 4.4 per cent fall, which represents $5.28 billion. That is a great deal of money which is being denied the states.

  It is essential that the states and territories have stable, sufficient and secure revenue streams to freely and confidently undertake the functions of government for which they have responsibility. The states are directly responsible for almost half of all public expenditure in Australia, yet directly they raise less than 25 per cent of public revenue. The balance is funded by grants from the Commonwealth, of which over 50 per cent under this government are tied to specific spending programs.

  The coalition parties accept that this problem—which is known by the archaic term of vertical fiscal imbalance—must be addressed as a fundamental issue of micro reform. Even Labor's former Prime Minister, Bob Hawke, came around to this point of view before he was knifed by Paul Keating and his comrades in 1991. Indeed, Mr Keating used the Hawke initiatives in this area as one of the reasons for the Hawke political assassination. Following that, the new Prime Minister, Mr Keating, quickly killed off any opportunity for long overdue reform in this area as it was totally incompatible with his own centralist authoritarian nature.

  Reform of federal/state relations was most recently discussed at the Council of Australian Governments, COAG, meeting in Darwin last month. Again Prime Minister Keating stonewalled on the issue of reform of financial relations, and again he jeopardised—deliberately so—real reform of a number of areas of national priority.

  The coalition believes that a fixed share of Commonwealth taxation revenue should be agreed to be for the states and territories. That share could then be passed to the states free of covenants and conditions to be used by them as they wish and as they determine to meet their expenditure obligations and priorities. Such a proposal would give the states access to a steady broad based income growth tax—something which they have been lacking ever since they handed their income taxes over to the Commonwealth during the Second World War.

  The states' current narrow based, limited, inefficient transactions or values based taxes severely restrict the states' revenue raising ability. This proposal, which is similar to the one which was agreed to in principle by Prime Minister Hawke and the states in November 1991, would greatly improve the development of cooperative federal relations. It could improve the delivery of substantial other reforms which the states are hesitant to undertake for fear of losing further revenue avenues, and hence control and independence over their own spending flexibility.

  It does not involve a new tax; it involves an extra tax. It does not involve anything vaguely resembling a state income tax; it is simply administratively and economically sensible and sound.

  I know that in this debate other coalition colleagues will speak further on some of these items and I will leave it at that point except to say in conclusion that the reform of Commonwealth/state relations will remain an essential item on the national reform agenda until it is properly addressed. It is a very significant requirement that we have fundamental, sensible reform of Commonwealth/state financial relations and the other relationships that flow from and are linked automatically with the financial base.

  At a meeting with representatives of the Business Council of Australia earlier this week I was interested to hear that reform of Commonwealth/state relations is now, in the view of the business community as well, one of the most essential items of reform that is required in this country. This issue will not go away and the longer it continues the more unnecessary duplication and inefficient administrative waste will continue to build up.

  I urge the government not to let another COAG meeting go by without rectifying this problem. Restoring autonomy to the states and giving them the means and the ability to make decisions in accordance with the wishes and priorities of their constituencies can only enhance our otherwise successful diverse federal system.

  On behalf of the coalition I have circulated a second reading amendment condemning the government for its continuing mismanagement of Commonwealth/state relations and for its threat to enforce compulsory student unionism by reducing state grants where students voluntarily choose not to contribute to a student union. I move:

  At end of motion, add

", but the Senate condemns the Government for:

  (a)its continuing mismanagement of Commonwealth-State relations; and

  (b)its threat to recoup from any State funds paid to that State as a result of the Parliament of that State repealing laws which proscribe compulsory student unionism at universities"